The fast-growing American footwear company has bought EXO Italia, a company based in Padua that specializes since 1993 in the design and production of products based on Ethylene Vinyl Acetate (EVA), primarily for the footwear industry. It’s Crocs’ first acquisition of a manufacturing facility in Europe, and the company has already started to produce injected EVA for its clogs on a small scale.
EXO Italia has already produced high-quality EVA-based footwear components for several leading branded consumer companies, including Nike, but it is not yet sure whether it will work for Crocs on an exclusive basis in the future. It will continue to work for Lego, for example.
Crocs says it wants to develop synergies between the company’s EVA and its own proprietary closed-cell resin, called Croslite. Crocs already uses seven other factories for EVA injection. It owns the former plant of Finproject in Canada and another one in Mexico. The five other suppliers are the main Finproject factory in Italy, one in Florida and others in China.
However Crocs’ management recently indicated that it was getting short on capacity. The company is expected to sell about 20 million of pairs worldwide this year, including 200,000 in Italy.
At a recent European investors’ conference, Ron Snyder, president and chief executive of Crocs, indicated that sales outside the USA are growing very rapidly, although they are still relatively marginal. They will represent only between 12 and 15 percent of this year’s total sales, but in the 2nd quarter they were already about one-third of the total. Crocs’ two star modelsd, the Beach and the Cayman, represent 85-90 percent of the company’s sales outside the USA and one-third of its sales through the internet. In the USA instead, half of sales come from other styles of footwear.
Global deliveries of Crocs shoes are being stepped up from three million pairs a month to 3.5 million by the end of this year and are set to reach four million pairs next Spring. The gross margin has risen to reach about 56 percent for the 3rd quarter. Operating margins are expected to grow from 26 to up to 28 percent in the near future.